Small airlines join fight against unfair swipe fees as big airlines try to defend unfair fees

U.S. PIRG joins the Merchants Payments Coalition and Senator Richard Durbin (D-IL) to argue that big airline industry practices are the biggest threat to credit card rewards and that more competition would help consumers earn better benefits and savings. After a joint hearing chaired by CFPB director Rohit Chopra and Secretary of Transportation Pete Buttigieg, Senator Durbin went to the Senate floor to say:

It is their own questionable practices that threaten American consumers’ ability to redeem rewards,” Durbin said, referring to banks and airlines.

“Modern-day airlines have become credit card companies that also happen to own airplanes.”

Durbin spoke on the Senate floor Thursday afternoon after the Consumer Financial Protection Bureau issued a new report saying airlines and banks often devalue or deny rewards even after requirements are met.

The report was released in conjunction with a joint CFPB-Department of Transportation hearing on the issue held Thursday morning after Durbin asked them to investigate reports of unfair and deceptive practices in airline frequent flyer and loyalty programs.

Durbin said Thursday that airlines push consumers to sign up for credit cards “as soon as they have their passengers buckled in” and cited studies showing they make more on co-branded cards than flying passengers. Other reports, he said, show that they regularly devalue rewards and that purchasing rewards from an airline website can cost three times as much as their value at redemption, making them a “rip-off with wings.”

The Merchant Payment Coalition further explained:

“The Credit Card Competition Act would bring needed market forces to the credit card industry and is intended to reduce credit card swipe fees, which average 2.26 percent of the transaction but can range as high as 4 percent. Credit and debit card swipe fees have more than doubled over the past decade and reached a record $172 billion in 2023. They are most merchants’ highest operating cost after labor, driving up prices by an estimated $1,102 a year for the average family. 

The fees have risen because of lack of competition: Visa and Mastercard – which control over 80 percent of the market – each centrally set swipe fees charged by banks that issue cards under their brands rather than allowing banks to compete to offer the lowest rate, further explained the Merchant Payment Coalition. They also block transactions from being processed over competing networks that offer lower rates and better security.

The CCCA would ensure that credit cards issued by the nation’s largest banks be enabled to be routed over at least one competing network like NYCE, Star, Shazam or Discover in addition to Visa or Mastercard’s networks. Banks would choose which networks to enable but merchants would then choose which to use, resulting in competition over fees, security and service expected to save merchants and their customers $16.4 billion a year, said the MPC.

Financial institutions with less than $100 billion in assets – including all community banks and all but one credit union – would be exempt, credit card rewards would not be affected and nothing would change about how cards are used.

This previous U.S PIRG blog explains our longtime support for Durbin’s bi-partisan bi-cameral Credit Card Competition Act, which has Roger Marshall (R-KS) as its lead Senate co-sponsor.

Senator Durbin has asked the CEOs of big airlines to testify before him and the Senate Judiciary Committee. So far, they haven’t.



Ed Mierzwinski

Senior Director, Federal Consumer Program, PIRG

Ed oversees U.S. PIRG’s federal consumer program, helping to lead national efforts to improve consumer credit reporting laws, identity theft protections, product safety regulations and more. Ed is co-founder and continuing leader of the coalition, Americans For Financial Reform, which fought for the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including as its centerpiece the Consumer Financial Protection Bureau. He was awarded the Consumer Federation of America's Esther Peterson Consumer Service Award in 2006, Privacy International's Brandeis Award in 2003, and numerous annual "Top Lobbyist" awards from The Hill and other outlets. Ed lives in Virginia, and on weekends he enjoys biking with friends on the many local bicycle trails.

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